Importance of Demand as an Economic Principle to an Organization

Colasuonno, 2016). Therefore, one of the primary objectives of any company is to estimate the current level of demand, forecast any potential future changes, and take measures to stimulate its growth. There are two implications of the volume of demand for a business. First, it determines the level of supply that a company needs to present in the market. Since there is a correlation between the volumes of demand and supply, a business may speculate on the prices to alter its revenues. However, it is also affected by the competition in the market and the scarcity of the goods and services produced by a company (Ma et al., 2017). Secondly, demand impacts the prices for substitute and complementary goods, where the first category gets more expensive when a product becomes cheaper, and the price of the second category changes in direct relationship with its complementary product. Therefore, by knowing and attempting to forecast and impact demand, a company can influence the price of its products and services and, consequently, revenues